A major dip in copper prices triggered a sea change in Zambia’s mining sector. Now rates have bounced back and the cornerstone of the Zambian economy has become more resilient than ever
Zambia is Africa’s second largest producer of copper, with output expected to reach between 800,000 and 850,000 tonnes in 2017. But when copper prices witnessed a sharp drop in 2015 and 2016, it hit Zambia’s economy hard – inflation grew, mining companies began to lean cost structures, and the foreign exchange rate of the kwacha plummeted.
In response, the government engaged with the country’s large mining companies such as First Quantum, KCM and Mopani to devise win-win regulations, as well as tightening fiscal policy, mapping out further resources and crafting the Mineral Value Chain Monitoring Project to boost transparency.
Then in 2017, global events like US infrastructure announcements, boosted Chinese economic growth and the rise of the electric car helped cause the price of copper to soar from a low of below $4,500 per tonne in 2016 to the February 2018 price of more than $6,910. This meant a major boost for Zambia’s mining industry, which accounts for approximately 12 per cent of GDP. Today, copper production is reinforced, and Zambia is aiming to overtake the Democratic Republic of Congo to become Africa’s largest producer.
But the lessons learned from the years of low copper prices also served to diversify the industry.
“The overdependence on copper mining resulted in vast unexplored and unexploited mineral wealth,” says Dr Pius C Kasolo, CEO of ZCCM Investments Holdings, a major mine investment holdings firm. “Considering the cyclical nature of the commodities market, the shift is now towards promoting exploration and exploitation of gemstones and other minerals.”
New companies have started mining Zambian tin and manganese, and British firm Consolidated Nickle Mine has invested to reopen the Munali mine. Zambia is already a leading producer of cobalt, a by-product of copper and nickel mining, and the sector has seen significant new interest from the private sector as its prices skyrocket. The government is also promoting investment opportunities in precious metals, coal, hydrocarbons and uranium, as well as throughout the supply chain.
“It took First Quantum just four years from the time it entered in 2012 to become the biggest mine. The new investors coming are confident about what is going on in the country and the resources we are sitting on,” says Christopher Bwalya Yaluma, former minister of mines and minerals development and current minister of commerce.
Zambia has vast reserves of gemstones like tourmaline and aquamarine, and new licenses have recently been granted. But emeralds are truly the country’s crown jewel. Zambian emeralds are of particularly high quality, due to high levels of chromium, and they account for around 40 per cent of the world’s supply. New methods of “paternity testing” for the gems have been developed so buyers can be sure that the emeralds they purchase are Zambian.
Gold processing at the the Kansanshi mine. One of the oldest mines in Africa, it is now capable of producing 340,000 tonnes of copper and more than 120,000 ounces of gold per year. Photo: ZCCM-IH